The opinion of the court was delivered by: REBECCA PALLMEYER, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Bruce G. Howell has filed this putative class action
lawsuit on behalf of the Motorola, Inc. 401(k) Profit Sharing
Plan (the "Plan") and on behalf of "all Participants in the Plan
for whose individual accounts the Plan purchased and/or held
shares of" Motorola, Inc. ("Motorola") common stock from May 16,
2000 to the present (the "Class Period"). Defendant Motorola,
which has substantial national and international operations in
the telecommunications, electronics, computer, and satellite
communications industries, was the Sponsor of the Plan during the
Class Period. Defendants include certain Motorola officers,
members of Motorola's Board of Directors, the Profit Sharing
Committee which served as the Plan Administrator, and members of
that Committee. Specifically, Christopher B. Galvin (Motorola's
Chief Executive Officer and Chairman of the Board of Directors
during all or part of the Class Period), Robert L. Growney
(Motorola's Chief Operating Officer during all or part of the
Class Period), Ronnie C. Chan, H. Laurance Fuller, Anne P. Jones, Donald R. Jones, Judy C. Lewent, Walter E. Massey,
Nicholas Negroponte, John E. Pepper, Jr., Samuel C. Scott III,
Gary L. Tooker, B. Kenneth West, and John A. White were members
of Motorola's Board of Directors during all or part of the Class
Period (the "Director Defendants"). Defendant Profit Sharing
Committee of Motorola, Inc. (the "Committee"), as well as its six
members-Defendants David Devonshire, Glenn Gienko, Garth L.
Milne, Ron Miller, William P. DeClerck, and Richard Enstrom,
constituted the Plan Administrator and "Named Fiduciary" of the
Plan during all or part of the Class Period (the "Committee
Defendants"). Defendant Rick Dorazil is Motorola's Vice President
and Director, Global Rewards-Benefits. Defendant Carl F.
Koenemann was at all times relevant to this action Motorola's
Executive Vice President-Finance and Chief Financial Officer.

Plaintiff alleges that all Defendants violated section
502(a)(2) and (3) of the Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. § 1132(a)(2) and (3). Specifically,
Plaintiff alleges that Defendants breached their fiduciary duties
to the Plan and the Participants by (1) negligently permitting
the Plan to purchase and hold shares of Motorola's common stock
when it was imprudent to do so, (2) negligently misrepresenting
and negligently failing to disclose material facts concerning the
management of Plan assets to the Plan and the Participants, and
(3) failing to appoint appropriate fiduciaries, to properly
monitor those fiduciaries, and to provide sufficient information
to enable the fiduciaries to fulfill their obligations under
ERISA. These purported failures all relate to allegedly risky
vendor financing agreements between Motorola and its business
partners, including a contract with Telsim Mobil Telekomunikayson
Hizmetleri A.S. ("Telsim"), a Turkish mobile telecommunications
company, as well as a purported liquidity crisis and unspecified
problems with at least two Motorola lines of business. Plaintiff
claims that Defendants' failure to disclose this information to
the public or to dispose of Motorola's shares under these
circumstances constituted a violation of section 404(a)(1)(B) of
ERISA, 29 U.S.C. § 1104(a)(1)(B), and Department of Labor
regulation 29 C.F.R. § 2550.404a-1(b)(2). Defendants seek to dismiss the complaint pursuant to FED. R.
CIV. P. 12(b)(6). For the reasons set forth here, Defendants'
motion to dismiss is granted in part and denied in part.

FACTUAL BACKGROUND

I. Motorola's Purported Problems During Class Period

As discussed below, the chief focus of Plaintiff's allegations
of mismanagement and concealment is Motorola's relationship with
Telsim. That relationship has been described in other reported
opinions and will not be exhaustively analyzed here. See, e.g.,
In re Motorola Sec. Litig., No. 03 C 287, 2004 WL 2032769 (N.D.
Ill. Sept. 9, 2004); Motorola Credit Corp. v. Uzan,
274 F. Supp. 2d 481, 491 (S.D.N.Y. 2003) (Rakoff, J.). Accordingly to
Plaintiff's Complaint, Motorola's Form 10-Q*fn1 for the
first quarter of 2000, which it filed with the SEC on May 16,
2000, stated that Motorola had "signed an agreement with Telsim,
which is estimated to have a sales potential of at least $1.5
billion over three years. Under this agreement, the Company
expects to provide infrastructure equipment, wireless phones and
associated services to expand the countrywide GSM network in
Turkey." (Cmplt. ¶¶ 1, 20.) Plaintiff alleges that this statement
was misleading in several respects. First, this supposed $1.5
billion agreement required Motorola to provide $1.7 billion in
vendor financing. Second, there were unspecified "serious ongoing
problems in the Motorola-Telsim relationship." Third, Telsim had
made numerous unspecified complaints about the systems it had
purchased from Motorola, some of these claims were legitimate,
while others were made in order to justify Telsim's failure to
repay any portion of the loan. Fourth, during the Class Period,
unnamed Motorola and Telsim officials frequently discussed the
need either for sale of Telsim to a third party or for a
"strategic partnership"*fn2 to address problems in the
Motorola-Telsim relationship. Fifth, "there was a huge risk to
Motorola's shareholders if Telsim defaulted on its agreement with Motorola, which it did during the Class Period."
Sixth, during the Class Period, Motorola took unspecified actions
that "severely damaged Telsim's name, brand, retail sales and
subscriber growth."

Plaintiff makes a handful of additional allegations that do not
relate directed to Telsim: Plaintiff alleges that Motorola had
provided vendor financing to other unidentified customers, so
that Motorola's total vendor financing commitment during an
unspecified period of time totaled approximately $2.9 billion. He
asserts, further, that during the Class Period, "Motorola
experienced a liquidity crisis" that endangered its credit
rating. Finally, "major portions of Motorola's lines of business,
including its semiconductor business and its business of
providing base stations for wireless service providers and other
nonconsumer telecom gear, were experiencing substantial
difficulties during the Class Period." (Id. ¶¶ 3(a), 50, 58,
60.)

II. Defendants

A. Motorola

Plaintiff claims that Defendant Motorola itself is a fiduciary
of the Plan on four grounds: (1) Motorola's Board of Directors
controlled the Plan Committee; (2) Motorola filed the Plan's
annual reports on Form 11-K with the SEC; (3) relevant portions
of Motorola's Summary Plan Description ("SPD") "constitute part
of a prospectus covering securities that have been registered
under the Securities Exchange Act of 1993"; and (4) Motorola's
filings either were incorporated by reference into the Plan's SPD
or otherwise were made available to the Participants during the
Class Period. (Id. ¶¶ 56, 59(a), 88.) Plaintiff alleges that
Motorola breached its fiduciary duties by allowing the Plan to
purchase and hold a large number of shares of Motorola common
stock and by failing to sell those shares at a time when it was
imprudent to hold Motorola stock. (Id. ¶ 57.) Plaintiff also
contends that "Motorola negligently made materially false or
misleading public statements which caused the common stock of
Motorola to be an imprudent investment," and that specifically,
its quarterly reports on Form 10-Q and its annual reports on Form
10-K "negligently misrepresented Motorola's relationship with Telsim" in that it
failed to disclose Motorola's difficulties, including its
relationship with Telsim, described above. (Id. ¶¶ 3(a), 59,
60.) In addition, Plaintiff claims that "Motorola should have
known that the[] public statements it negligently issued
[regarding the Telsim relationship] during the Class Period were
materially false and misleading and should have known that th[is]
adverse information caused the common stock of Motorola to be an
imprudent investment." (Id. ¶ 61.)

To support its contention that Motorola breached its fiduciary
duties in purchasing and holding Motorola common stock when it
was an imprudent investment, Plaintiff cites several public
statements regarding the Telsim transaction. First, on or about
April 6, 2001, Bloomberg News published an analysis of
Motorola's debt problems, including its loan to Telsim, noting
that the company was owed "a staggering $1.7 billion by a single
customer in an emerging market country." (Id. ¶ 62.)*fn3
Second, in a 2002 book, Arthur Levitt, chairman of the SEC from
July 1993 to February 2001, opined that "Motorola should ask
itself: why is it in shareholders' interest to invest in a
company that fails to disclose an enormous risk taken with their
money?" (Id. ¶ 64 (citing ARTHUR LEVITT, TAKE ON THE STREET:
WHAT WALL STREET AND CORPORATE AMERICA DON'T WANT YOU TO KNOW 167
(2002)). Finally, on May 2, 2003, unidentified individuals
affiliated with Telsim published a notice in the Wall Street
Journal complaining that "Motorola management has severely and
knowingly damaged the Telsim brand, its retail sales, and its
subscriber growth. These are, of course, the very sources of
income from which the loans [to Motorola] could be repaid."
(Id. ¶ 63.)

Plaintiff also claims that Motorola "cause[d] the Plan to offer
the common stock of Motorola as an investment option." (Id. ¶
88.) According to Plaintiff, "Motorola negligently misrepresented
and negligently failed to disclose material information
[regarding Motorola's difficulties, including its relationship
with Telsim, discussed above] in the SPD and in its SEC filings
during the Class Period." (Id. ¶ 89.) Alternatively, Plaintiff claims that
Motorola is liable under the principle of respondeat superior
for the actions of Director Defendants, as the Directors were
compensated by Motorola and "acted solely in the scope of their
agency for Motorola." (Id. ¶¶ 36, 106.)

B. Director Defendants

Plaintiff contends that Director Defendants had the power to
appoint and remove members of the Committee, and were obligated
to appoint to the Committee only persons "who would refuse to
offer Motorola common stock as a retirement investment available
to Participants" if that stock were not a prudent investment.
(Id. ¶¶ 17, 35, 37, 69, 70, 103.) In addition, Plaintiff
alleges that Director Defendants had the ability, authority, and
responsibility to monitor Committee Defendants and other
fiduciaries of the Plan, "and had the affirmative obligation to
provide the Committee Defendants with all information available
to the Director Defendants that the Director Defendants should
have known would be important to . . . Committee Defendants in
managing the Plan and the Plan's assets in a prudent manner."
(Id. ¶ 17.) According to Plaintiff, Director Defendants
violated these obligations when they appointed as members of the
Committee one or more Motorola employees who, "by definition,"
lacked the necessary independence, knowledge, and skill to carry
out their responsibility and were therefore influenced or
controlled by Motorola or the Director Defendants with respect to
the Plan management and investment. (Id. ¶¶ 35, 56(a), 70(b),
103(b)-(c).) Plaintiff also urges that Director Defendants failed
to monitor Committee members' performance or to provide them with
information that Director Defendants knew or should have known
the Committee members needed. (Id. ¶ 70(c)-(d), 103(d).)
According to Plaintiff, Director Defendants should have known
that Motorola was making available to the Participants the
allegedly misleading SPD and SEC filings. (Id. ¶ 90.) Plaintiff
contends, further, that Director Defendants themselves "exercised
discretionary authority or control respecting management of the
Plan or management of the disposition of its assets." (Id. ¶
68.) C. Committee Defendants

Plaintiff alleges that Committee Defendants had "complete
authority and discretion to control and manage the operation and
administration of the Plan." (Id. ¶¶ 38, 92.) Plaintiff urges
that Committee Defendants breached their fiduciary duties to
Participants by offering Motorola common stock as an investment
option at a time when Motorola stock was not a prudent
investment. (Id. ¶¶ 39, 73.) According to Plaintiff, "Committee
Defendants had a duty to ascertain the true state of affairs at
Motorola, including with respect to the extremely significant
Motorola-Telsim relationship [discussed above], and to fully
inform the Participants concerning these material facts." (Id.
¶ 92.)

D. Rick Dorazil

Defendant Rick Dorazil,*fn4 who served as the Plan's
"404(c) Fiduciary," signed the Plan's 2000 and 2001 Forms
11-K,*fn5 which were filed with the SEC on June 27, 2001 and
June 27, 2002, respectively. (Id. ¶¶ 13, 74.) Plaintiff alleges
that Dorazil should have known that Motorola was disseminating
the Plan's SPD to Participants and making Motorola's SEC filings
available to Participants during the Class Period. (Id. ¶¶ 14,
87.) Plaintiff further claims that Dorazil should have known that
these documents contained misleading information (discussed
above), should have prevented them from being made available to
the Participants, and should have ensured that correct
information was being disseminated. (Id.) According to
Plaintiff, Dorazil also "exercised discretionary authority or
control respecting management of the Plan or management or
disposition of its assets." (Id. ¶ 75.) E. Carl Koenemann

Defendant Carl F. Koenemann was responsible for preparing the
SEC filings that were incorporated into the SPD. (Id. ¶¶ 42,
77.) According to Plaintiff, Koenemann acted as a fiduciary with
respect to the Plan and "was in a unique position to inform the
Director Defendants and the Committee Defendants of the true
facts concerning the Motorola-Telsim relationship and other
material facts" (discussed above) and either failed to do so or,
alternatively, "succeeded in doing so but acquiesced in the
concealment from Participants of this important information."
(Id. ¶¶ 18, 77.) Plaintiff alleges that, like Dorazil,
Koenemann exercised discretion with respect to Plan management
and Plan assets. (Id. ¶ 78.)

F. Allegations Against All Defendants

Plaintiff urges that all Defendants should have ceased
purchasing shares of Motorola common stock and offering Motorola
common stock as an investment option, and should have sold all
shares that the Plan held of Motorola common stock. (Id. ¶ 51.)
According to Plaintiff, Defendants failed to consider the risks
inherent in Motorola common stock (because of Motorola's
difficulties, including its relationship with Telsim, discussed
above) when evaluating the prudence of such stock as a Plan
investment option. (Id.) Plaintiff also maintains that all
Defendants should have known the facts regarding the Telsim
transaction and "should have known that the Plan should not have
invested such massive amounts in the common stock of Motorola."
(Id. ¶ 80.)

III. Motorola 401(k) Profit Sharing Plan

The Plan is a participant-directed, defined contribution plan
that permits Participants to choose from nine investment options
pursuant to ERISA § 404(c) and to shift among options at any
time. (Def. Mem., at 4-5; Exs. A-D to Def.' Mem.)*fn6 One
such investment option is the "Motorola Stock Fund," which is an
investment fund consisting solely of Motorola common stock.
(Cmplt. ¶¶ 2, 34(d).) As of December 31, 1999, the Plan's investments
totaled $6,980,926,000, of which approximately $1,547,214,000, or
22%, was invested in Motorola common stock. (Id. ¶ 48.) As of
December 31, 2000, the Plan's investments totaled $6,003,900,000,
of which approximately $906,146,000, or 15%, was invested in
Motorola common stock. (Id.)

Plaintiff notes that "[t]he SPD and Motorola's SEC filings
constituted representations made in a fiduciary capacity by all
Defendants." (Id. ¶ 44.) The SPD included a chart comparing the
relative risk of the various investment options available under
the Plan and identifying the Motorola Stock Fund as the riskiest
investment option. Nevertheless, Plaintiff urges that the chart
concealed the extent of risk involved in Motorola's relationship
with Telsim, as well as the fact that when employees invest
exclusively or primarily in their employer's stock, they take on
a much greater risk than they would accept with a more
diversified portfolio. Plaintiff claims, therefore, that all
Defendants "failed to adequately inform the Participants
concerning the true extent of the risk involved in choosing the
common stock of Motorola as a retirement investment." (Id. ¶
57.)

DISCUSSION

Under section 404(a)(1)(B) of ERISA and its implementing
regulations, fiduciaries of an employee benefit plan are
obligated to act "with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and with like
aims." 29 U.S.C. § 1104(a)(1)(B). This so-called "prudence rule"
requires that a fiduciary

&nbsp;

give[] appropriate consideration to those facts and
circumstances that, given the scope of such
fiduciary's investment duties, the fiduciary knows or
should know are relevant to the particular investment
or investment course of action involved, including
the role the investment or investment course of
action plays in that portion of the plan's investment
portfolio with respect to which the fiduciary has
investment duties.

29 C.F.R. § 2550.404a-1(b)(1). "Appropriate consideration"
includes:

(i) A determination by the fiduciary that the
particular investment or investment course of action
is reasonably designed, as part of the portfolio (or,
where applicable, that portion of the plan portfolio
with respect to which the fiduciary has investment duties), to further the purposes of the
plan, taking into consideration the risk of loss and
the opportunity for gain (or other return) associated
with the investment or investment course of action,
and

(ii) Consideration of the following factors as they
relate to such portion of the portfolio:

(A) The composition of the portfolio with regard ...

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